Bridging the Gulf

Despite the recession and the impact of Dubai’s debt crisis, Cisco is adamant that the Middle East remains crucial to the company’s future

Tags: Cisco Systems IncorporatedKuwaitOmanQatarSaudi ArabiaTelepresenceUnited Arab Emirates
  • E-Mail
Bridging the Gulf Wayne Fullerton, speaking to ACN via Telepresence, said universities and Smart Cities were driving demand for Cisco’s products in Saudi Arabia.
More pics ›
By  Ben Furfie Published  September 16, 2010

Despite the recession and the impact of Dubai’s debt crisis, Cisco is adamant that the Middle East remains crucial to the company’s future. Wayne Fullerton, general manager for Cisco Saudi Arabia, and Wayne Hull, general manager for Cisco UAE, spoke exclusively to ACN about the company’s hopes for its enterprise business in the region.

For a company that specialises in building infrastructure, there are few places on the planet that seem more appropriate, or offer the same commercial opportunities, as the Middle East.

Even after the recession, investment in the region — both private and governmental — has remained strong, especially contrasted against the shrinking economies of the West. Much of this is being driven by a desire to build cities that will fuel the economies of the Middle East.

“That desire to help secure the economic future of the region has driven an enormous programme of city building,” explains Wayne Fullerton, general manager for Saudi Arabia at Cisco. “Despite the recession, there has been a continued drive to carry on building, especially here in Riyadh. I remember arriving in the region 12 months ago, and when you drove from the airport to downtown Riyadh there was a huge expanse of open space. When you drive down that same road today, it’s a huge hive of activity with the building of colleges and other infrastructure.”

Indeed, this keen focus in investment within education is one of the key areas that Cisco is seeing growth in. “The population of both the UAE and Saudi Arabia are both extremely young, with a large proportion of people living there currently under 15 years old,” says Wayne Hull, general manager of Cisco’s UAE operations.

Fullerton says that over the next couple of years, there will be one million kids entering the job market each year in Saudi Arabia alone.

“The real question is where are the jobs going to come from? For a lot of them, they’re going to come from infrastructure projects — and in particular, IT infrastructure,” he says.

The focus on this demographic is one of the main things driving the goals of Cisco in the Gulf, where it employs in excess of 350 people.

“King Abdullah of Saudi Arabia is one of the driving forces behind the prioritisation of education in the region,” explains Fullerton. “A good example of this is that the Saudi education budget for the next year will be 25% of the overall budget.”

It’s no wonder, then, that the education market forms a major part of Cisco’s enterprise strategy in the Middle East, and a vertical segment where demand for its high-end networking equipment looks poised to increase in the coming years.

Saudi Arabia isn’t alone in this huge investment in education either. The UAE, too, has been spending heavily on its educational infrastructure, with over 300 public schools in the country currently being linked together with one of the most advanced networking and software projects being undertaken anywhere in the world. “It’s more akin to what we’re used to seeing in the banking sector than the educational sector,” adds Hull.

One of the major themes running through all of the countries that Cisco operates in within the Gulf region is their development from small trading outposts to oil-fuelled economies and on to modern highly diversified global economies with interests as varied as construction through to communications.

“Granted, we’ve seen a slowdown in the amount of building activity, but you could say that it was little more than a market correction,” says Hull. “The amount of construction that had been going on prior to the recession was stupendous. I think it has clouded people’s perception as to how much construction is still going on,” he adds. “There are still huge opportunities for IT companies like Cisco, especially in the high-tech construction projects, for example the building of university cities in Saudi.”

It isn’t just the rapid growth that has seen Cisco remain optimistic. “There really isn’t anywhere else on the planet that is positioned perfectly in between the economies driving global trade like the US, UK and Western Europe in the West, and China, India, Japan and Australia in the East,” continues Hull. “The Middle East is positioned right in the centre of the biggest shift in global commercial power since the formation of the British Empire.”

However, one of the biggest challenges that Cisco admits it faces in the region is the difference in adoption of fixed line broadband between the West and the adoption of mobile phones in the Middle East.

“Saudi, for example, has a mobile phone adoption rate approaching 200%, well above most countries in the West,” says Fullerton. “On the other hand, adoption of what we would consider as traditional broadband services — that is those coming through a fixed line service, are well below those of Western economies. That presents new challenges for us,” he concedes.

Hull puts the difference in adoption rates down to the high prices consumers and businesses have traditionally had to pay in the region for fixed line broadband access. “Things are improving in the UAE for example,” says Hull. “But we’re still some way off a cost/service balance like there is in Western nations. It’s crucial that this is addressed by the chief parties in the region, as its position between the East and the West presents a onetime chance to evolve the economies of the Middle East into a communications hub.”

Even once problems with connection speeds and pricing are resolved, issues will still remain around the clash between the open nature of the internet and the more traditional, conservative cultures of the Middle East. It’s something that is to be expected, according to Hull. “It’s important to remember, it isn’t just the cities that have developed in 50 years, but also the cultures of these countries. 40 years ago, the UAE as it stands today didn’t exist. A lot of people forget that. Rapid change breeds fear. Once people have had a chance to adapt to the rapid pace of the development, we’ll see a  move away from worries about the impact the internet will have on their culture, towards utilising it to promote and enhance their own culture.”

But will the time the culture shift takes to happen have a negative impact on the economies of the Middle East? Not at all argue both Hull and Fullerton. “Few countries are going to undergo such a major upheaval in every aspect of their existence as those with predominately young populations in the Middle East will,” explains Fullerton.

“They don’t have the same barriers to adoption as companies in the West do — an ingrained idea of how things are and should be done. It’s going to be up to the youth of today, and just like any youth from around the world, their minds are open to new possibilities and opportunities in ways that the older generation simply aren’t,” echoes Hull.

As Cisco assesses its strategy for the Gulf, growth is still at the forefront of its thinking.

“On a macro level, the UAE and Saudi Arabia’s plans haven’t been dulled. Sure, a couple of companies might not be able to do what they had planned before the recession, but overall there is still a huge ambition to make things happen,” says Fullerton.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code